T.C. Summary Opinion 2001-181
UNITED STATES TAX COURT
JOSE CORONA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5097-00S. Filed December 10, 2001.
Jose Corona, pro se.
Peter C. Rock, for respondent.
DINAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority. Unless otherwise indicated,
subsequent section references are to the Internal Revenue Code in
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effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
Respondent determined deficiencies in petitioner’s Federal
income taxes of $4,037 and $3,715 for the taxable years 1997 and
1998, respectively.
The issues for decision are: With respect to 1997 and 1998,
(1) whether petitioner is entitled to head of household filing
status; (2) whether petitioner is entitled to two dependency
exemption deductions; and (3) whether petitioner is entitled to
an earned income credit; and, with respect to 1998, (4) whether
petitioner is entitled to a child tax credit.
Some of the facts have been stipulated and are so found.
The stipulations of fact and the attached exhibits are
incorporated herein by this reference. Petitioner resided in
Oakland, California, on the date the petition was filed in this
case.
In both of the years in issue, petitioner filed a Federal
income tax return as a head of household. He reported wage
income of $9,337 in 1997, and $19,616 in 1998. In each year, he
claimed two dependency exemption deductions for Cathy Corona and
Jose Corona, Jr., and claimed the earned income credit with Cathy
and Jose as qualifying children who lived with him the entire
year. In 1998, he claimed a child tax credit for Jose.
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In the statutory notices of deficiency, respondent changed
petitioner’s filing status to single in each year and disallowed
the dependency exemption deductions and the credits.
Among other requirements, a taxpayer generally is entitled
to a dependency exemption deduction for a child only if the
taxpayer provides over half of the child’s support during the
taxable year. Sec. 151(a) and (c); sec. 152(a).
Generally, a taxpayer is entitled to head of household
filing status only if the taxpayer maintains a household which is
the principal place of abode of an unmarried child. Sec.
2(b)(1).
Under section 24(a), a taxpayer is allowed a credit for each
qualifying child. For purposes of section 24, a taxpayer’s child
is a qualifying child of the taxpayer only if the child is under
the age of 17 at the close of the taxable year and entitles the
taxpayer to a dependency exemption deduction. Sec. 24(c)(1).
Petitioner and his wife, Matilde Corona, separated in 1995;
whether they are still married is not established in the record.
Cathy and Jose are the children of petitioner and Ms. Corona and
were born in 1979 and 1985, respectively. The only evidence
provided to support petitioner’s entitlement to the disallowed
deductions and credits is testimonial. Petitioner testified that
Ms. Corona removed Jose from petitioner’s home against
petitioner’s will sometime in mid-1997, and that Jose remained
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with Ms. Corona until mid-1998 or possibly after the end of the
year. Petitioner also testified that Cathy lived with petitioner
during all of 1997 and all of 1998, and that petitioner supported
Cathy during this time. Ms. Corona, on the other hand, testified
that both Cathy and Jose lived with her and were supported by her
starting in September 1997 and throughout 1998.
We do not find petitioner to be a credible witness because
by admitting that Jose did not live with him throughout all of
1997 and 1998, as indicated on his tax returns, he has admitted
that he provided false information on those returns.
Furthermore, petitioner’s testimony was contradicted by the
testimony of Ms. Corona, whom we find to be a more credible
witness. We therefore accept Ms. Corona’s version of events.
We find that Jose and Cathy lived with petitioner only until
August 1997, and that they lived with and were supported by Ms.
Corona after that time. Petitioner is not entitled to a
dependency exemption deduction for either Cathy or Jose in 1998,
because they were not supported by him during that year. Sec.
152(a). Petitioner likewise is not entitled to a dependency
exemption deduction for either Cathy or Jose in 1997: We do not
accept petitioner’s testimony that he supported the children
during 1997 for the reasons stated above and because petitioner’s
income level of $9,337 indicates the children likely had other
sources of income. Because petitioner is not entitled to the
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dependency exemption deductions, he also is not entitled to head
of household filing status, sec. 2(b)(1), for 1998, or to a child
tax credit, sec. 24(c)(1), for either 1997 or 1998. However,
because petitioner furnished over half the cost of maintaining
his home, we find that he is entitled to head of household status
for 1997, because Jose and Cathy lived with him for more than one
half of that year.
Under section 32, an eligible individual is allowed a credit
which is calculated as a percentage of the individual’s earned
income, subject to certain limitations. Sec. 32(a)(1). Any
individual with a qualifying child is an eligible individual.
Sec. 32(c)(1). An individual with qualifying children is
entitled to a larger credit than is an individual without
qualifying children. Sec. 32(a) and (b). As is relevant here,
the definition of a qualifying child for purposes of section 32
includes a child of a taxpayer who has the same principal place
of abode as the taxpayer for more than half of the taxable year.
Sec. 32(c)(3)(A). A qualifying child either must be under the
age of 19 (or a student under the age of 24) at the close of the
taxable year, or be permanently and totally disabled at any time
during the year. Sec. 32(c)(3)(C).
Petitioner is not entitled to an earned income credit in
1998 because his income was too great and he had no qualifying
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children in that year while Cathy and Jose resided with Ms.
Corona. Sec. 32(c)(3)(A).
Respondent disallowed the earned income credit in 1997
solely because petitioner’s dependency exemption deductions had
been disallowed. Qualification for a dependency exemption
deduction is not a prerequisite to being a qualifying child.
Sec. 32(c)(3). Ms. Corona’s testimony established that
petitioner’s children Cathy and Jose lived with petitioner prior
to September 1997, which means they lived with petitioner more
than half of that year, and both Cathy and Jose were under the
age of 19 at the end of 1997. We therefore hold that petitioner
is entitled to the earned income credit in 1997.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered
under Rule 155.